Options Trading News

Pretium Resources is near all-time lows, and one trader is looking for a sharp move up or down in the precious-metals producer.

optionMONSTER systems show that a trader was buying March 2.50 puts yesterday, paying $0.60 for large blocks adding up to 15,500. This is clearly a new position, as open interest in the strike was a mere 70 contracts before the trade appeared.

Shortly afterward, a block of 286,000 shares was bought for $3.68. The combination of stock and puts creates a delta-neutral play that would profit from higher volatility than that implied by the options, rather than a specific directional move. (See our Education section)

PVG lost 3.01 percent yesterday to close at $3.54. The Canadian company was above $10 in late August but hit a lifetime low of $3.04 last week.

Overall option volume in the name was 16,513, topping the total open interest and eclipsing the daily average of 648 contracts.

So far, my articles have taken you through a logical progression of option theory and fundamental concepts of options. As of yet, I have not mentioned a single strategy and for a good reason! The actual application of a strategy should come AFTER you learn about the option product itself.

optionMONSTER® provides stock market insight, advanced options education, and actionable trade ideas to meet the needs of do-it-yourself investors. After spending decades in the trading pits of Chicago, Jon 'DRJ' and Pete Najarian founded the company in 2005 to help people better manage their own investment portfolios.

OptionsHouse is separate from but affiliated with optionMONSTER®. Both are subsidiaries of Aperture Group, LLC.

All investments involve risk, and the past performance of a security, industry, sector, market, financial product, trading strategy, or individual's trading does not guarantee future results or returns. Investors are fully responsible for any investment decisions they make. Such decisions should be based solely on an evaluation of their financial circumstances, investment objectives, risk tolerance, and liquidity needs.

optionMONSTER's reference to specific securities should not be construed as a recommendation to buy or sell that security. Specific securities are mentioned for informational purposes only.